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Metro blunder rekindles specter of price-fixing

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PHOTO MARTIN CHAMBERLAND, ARCHIVES LA PRESSE

Nearly four in five Canadians believe that grocers maneuver to inflate prices at the grocery store.

As the food inflation storm continues, some grocers, including Loblaw, are trying to score points with consumers by freezing the prices of many products. Nice effort, but Metro’s reaction to Loblaw’s campaign has raised serious questions about industry pricing practices, yet again.

The rate of food inflation in Canada has exceeded that of general inflation in our country for 10 consecutive months now. In September, the food inflation rate was 10.3%, according to the latest consumer price index released by Statistics Canada last week. As Canadian grocers once again face a barrage of criticism from concerned Canadians, some have started to react.

Loblaw’s most recent announcement to launch the world’s largest price freeze campaign drew mixed reactions from Canadians.

Some welcomed the move, but others, who still remember the 14-year bread price-fixing scheme, understandably reacted to Loblaw’s announcement with considerable skepticism. Consumer confidence in grocers had been undermined at the time, which still arouses mistrust today.

Loblaw’s campaign will continue for more than 10 weeks, including during the very lucrative holiday season. It’s unclear whether customers will actually save or how much they’ll save, but this promotion will bring some predictability to consumers.

However, Metro’s reaction caused confusion. While Sobeys simply chose to showcase some of its ongoing promotions, Metro decided to go on the offensive.

Metro said, “It is industry practice to have a price freeze from 1er November to February 5 for all private label and national brand grocery products, and this will be the case in all Metro outlets. A day later, Metro issued another statement clarifying that its position was on price freezes with suppliers, not retail prices.

Before it had to correct itself, Metro clearly wanted to undermine Loblaw’s campaign by stating that the price freeze at this time of year was nothing out of the ordinary. In doing so, without even thinking twice, he let the general public know that he was acting in collusion with other grocers. Retail collusion is of course illegal.

Many in the industry are familiar with seasonal cost management practices. Grocers will be inclined to accept cost increases during certain times of the year. However, the winter periods, known as “blackouts”, will encourage grocers to reject cost increases from suppliers.

Metro’s statement was likely released in haste, in response to media inquiries the same day Loblaw made the announcement. Yet, it appears that, at the time, Metro didn’t even realize how incriminating his statement was becoming to himself and the industry as a whole, which could point to a much larger problem.

Nearly four in five Canadians believe grocers are maneuvering to inflate grocery prices, and Metro’s statement reinforced that sentiment.

Supported by a unanimous parliamentary vote, Ottawa will shortly launch its survey of food prices and inflation in the coming weeks. The Standing Committee on Agriculture will have to thoroughly review Metro’s statement and understand its implications for the industry and for consumers. Even the Competition Bureau is getting involved with its own study on the same phenomenon.

Beyond that, the committee must also understand that greed can be found anywhere in the food chain, from farm to store, and not just on store shelves. Retail prices for certain verticals such as dairy, meat and bakery have shown erratic trends in recent years. It should come as no surprise that the meat processing industry is currently the subject of two class actions, in Quebec and British Columbia. The Competition Bureau needs to be more proactive in monitoring what is happening across the food spectrum.

Targeting only grocers would be like blaming a restaurant waiter when a dish is undercooked. Hopefully the committee will commit to looking at legitimate root causes, not just populist targets to score political points. But Metro did not help the grocers’ cause.



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